While the U.S. is fretting and fuming, Japan seems to have its own share of problems. The Japanese economy has been relatively insulated from the collapse of the U.S. credit and housing markets that precipitated the global crisis but the truth is that it faces its worst economic crisis since World War Two.
Low domestic consumption coupled with an unprecedented slump in exports (such as cars and electronics) has shrunk Japan’s economy by 3.3 percent, its worst result since the first oil crisis in 1974. Japan’s finance minister, Shoichi Nakagawa, who should be facing the music has resigned, denying allegations that he was drunk at a G7 news conference. Apparently he took too much cough medicine instead! (Reuters)
This coincides with U.S. Secretary of State Hillary Clinton’s trip to Japan where she praised the U.S.-Japan alliance stating that the United States and Asia needed to work together on the global financial crisis and climate change. Noble words from the Secretary of State but one can only wonder whether the concern is actually about addressing the economics and environment situation or whether in fact the U.S. desperately needs to reinforce ties with Japan given their increasing concern over Pyongyang’s nuclear program.